Earnings Preview: Costco Wholesale Corporation, Canadian Solar Inc., and Joy Global Inc.

Analyzing recent option activity on Costco Wholesale Corporation (COST), Canadian Solar Inc. (CSIQ), and Joy Global Inc. (JOY)

by Griffin Kruse

Published on Mar 4, 2015 at 12:21 PM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks gearing up to report earnings tomorrow morning are retailer Costco Wholesale Corporation (NASDAQ:COST), alternative energy concern Canadian Solar Inc. (NASDAQ:CSIQ), and mining equipment maker Joy Global Inc. (NYSE:JOY). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on COST, CSIQ, and JOY.

  • COST has been a technical outperformer, with the shares up 26.3% year-over-year to reach $147.08. However, put buying has been popular in the stock's options pits ahead of tomorrow morning's earnings report. Drilling down, Costco Wholesale Corporation's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.96 sits in the 89th percentile of its annual range. Meanwhile, in the session immediately following its last four earnings reports, COST has shed an average of 0.53%, including a 2% dip in December. Traders are paying inflated prices for their near-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 21% sits in the 69th percentile of its annual range.

  • CSIQ will follow its sector peers into the earnings confessional, and ahead of the event, the stock has been in recovery mode. Specifically, the shares are up 61.6% since hitting an annual low of $18.68 on Jan. 22 to trade near $30.19. Despite this uptrend, sentiment is still pessimistic in the options pits, as Canadian Solar Inc.'s 50-day ISE/CBOE/PHLX put/call volume ratio of 0.65 sits in the 79th percentile of all similar readings taken over the past year. Traders hoping for a negative post-earnings move tomorrow have history on their side -- in the session immediately following its last four earnings reports, CSIQ has lost an average of 2.5%. Short-term options are currently available for average prices, as CSIQ's SVI of 75% sits in the 47th percentile of its annual range.

  • On the other hand, the shares of JOY have been sliding, with the equity down 35.9% since hitting an annual high of $65.36 on July 16 to reach $41.92 -- including today's 2.5% drop. Meanwhile, calls are currently popular in the stock's options pits, as Joy Global Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 2.98 sits in the 76th percentile of all similar readings taken over the past year. Looking elsewhere, in the session immediately following its last four earnings reports, JOY has advanced an average of 1.7%, including a 6.7% gain in June of last year. Traders are paying middling prices for their short-term bets on the security, as its SVI of 40% sits squarely in the 50th percentile of its annual range.


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